Let’s get down to the basics before we delve in more advanced tech. What is a business? An entity that offers a solution (or a set of solutions/products) to more than one customer. It caters to a defined or latent need. It offers this ‘value’ and accepts value back as compensation (money, time, or now, even access to personal info with permission). What are the elements in play here? There’s a business, a customer, and a market and customers are making traditional transport movement obsolete, fast.
A market is essentially a place or platform where the business and customer interact and exchange value.
Businesses look to create awareness for the products among the right-customers (target audience), make it available to the customer to try out or buy, put the final product into the hands of the customer, take feedback and offer after-sales service.
Some businesses invest heavily in the current ‘way of doing things’ and discard the probabilities of the same ‘way of doing things’ evolving over time. We have seen this in businesses getting ‘cocky’ saying they know what the customers want and how they want it, just because it has worked for them before. It won’t necessarily work for them in the future. That’s why some like ‘Toy’s R Us’ fell by the side. Who’s to blame? No one. That’s the nature of evolution.
As customers and their needs improve, so does the market. How a business and customer interact and deal with each other, keeps evolving. A customer has multiple quality products that they can choose from. Customer needs are not “needs,” they are “demands.”
Businesses have become very good at making the best product, backed by great promotional campaigns. Also, now the customer has the tools required to make an intelligent choice about what they want to buy. There are peer-reviews in blogs and videos for them. In a heavily social word, word-of-mouth, or what we now call ‘viral’ coverage has made it very easy for quality products to be recognized. This covers the awareness.
Customers know what they want, do you?
Customers now know exactly what they want, and they know what everyone in the market is offering. They are well-prepared to make a wise choice. Some businesses have reached a saturation point to how much they can improve their products (as per customer’s needs). No matter how much they improve, there would be someone else who would do it better and market themselves more aggressively. Once customers agree that the competitor’s products are more suited to them, they will simply switch.
What businesses considered as their core-differentiator, is becoming less and less unique. Competitors are closing on market leaders with their own identical or better products. As for the customer, they see more and more companies offering similar products and expect price-wars. Market leaders tend to reach their deep pockets and offer discounts to push the new-entrant competitors out of the business. This, however, restricts them to do what they were actually good at, building a product which evolved faster than how the customer’s need evolved.
Since the new entrants have moved the battle, they can attract external investment, use it to lay down a long runway for their growth, and keep eating into the market. Sooner rather than later, more new entrants join in. They are all attacking the big fish. Then, eventually, the market opens up with no clear leader. The previous leader would now share the stage with any one of the new-entrants (that hasn’t burn through their funds already) themselves. The product differentiators won’t be the same for long. Businesses must build more than one differentiator to sustain.
Make it available and convenient for the customer
Beyond the awareness and product quality, there is a very important part of the market that can create that additional value which makes the customer stay with a company. The ‘availability’ part. They can build a lasting differentiator here which would be extremely difficult to emulate.
Getting it into the hands of the customer at the right time, in the right manner. The movement of your product has to be perfect. Imagine going to a fine restaurant. Even though the food might be nice, if it is just slapped on to a plate and dumped in front of you, next time you would go to the restaurant which gives you more respect. That’s exactly the role good transportation practices play in end-customer satisfaction.
It starts with a delivery promise
Let’s run through a simulation. A customer goes to a portal and selects a product they like. They place the order and get an option. Do they want the product the next day or after two-days? They select the next-day. What was the point of giving the customer this option? They have already selected the product and probably would pay for it in the next instance. Why take the extra effort to put the product in their hands the next day itself?
Here, you are increasing the probability of getting-in on their next purchase. When they buy again, they would be more likely to come to you. There’s your differentiation. You just gave the customer the control over their delivery time window. There are even options where the customer can pick how they want to receive the product, to be left with a neighbor, to be gift-wrapped, etc. There’s a lot to say about these promises and the delight it creates for the customer.
Remember retail ambiance? Malls spent millions creating ‘that’ ideal ambiance with air conditioning and music to offer that extra delight which would make the customer come back. Ambiance has been replaced by the ideal ‘delivery experience’.
Create the highest value for customer, company, and economy
What’s in it for the customer? Faster delivery, more control over the timelines, and hence, higher value. For them they just got a discount, and on top of that, they are getting this amazing deal of faster delivery and other perks.
What’s in it for the company? Higher customer satisfaction and retention; and creating lasting business differentiation. Another factor from stationary retail that has evolved is the idea of an impulse buy. When customers are happier at the time of check-out, with the promise of getting hold of the product very soon, they are more inclined to buy large amounts and more frequently. Companies can, not just lengthen customer lifetime value, but also increase it multifold.
What’s in it for the market or economy? Customers have a higher buying power than before. When they are delighted by the perceived benefits of such purchases, they would buy more and support the economy (and connected businesses) more. There’s also the factor of technology evolution which goes hand in hand with these interactions. Almost, all elements of this market are backed by technology. And technology development directed by businesses (in need of market growth) always brings in high-levels of innovation.
Delivery promises turn into expectations and then experiences
It’s all well and good, as far as promising a great delivery experience to the customer goes. Now, the business must fulfill these promises. How would they ship a product halfway across the country in a day? Those that win this transportation challenge, win the market.
The secret lies in proper technology intervention and support.
The latest in cloud-based optimization solutions give businesses the ideal plan on how to best pick and load the product in-time from the warehouse, dispatch it on-time, track it as it moves through a route optimized to pass through minimal traffic – avoiding unnecessary delays and detention, reach the local distribution center, pass on the right product to the smaller vans quickly, and track the passage through connected scanning devices.
Now comes the tricky part, there are hundreds of such customers that requested next day delivery. This part of the distribution leg is called the last mile. Tons of literature is written about the complexities of such movement. There are multiple versions of the traveling salesman problem out there about this same scenario. Manually planning these complex legs ends with delays, which in turn lead to late or missed deliveries.
The irony of customer expectations is that now you potentially lost a customer because of an expectation the customer didn’t set themselves, but was prompted to do so by you. If you just hadn’t given them an option and said that the delivery would take two days, then all would be fine. But then, someone might have offered them a similar product in faster time and the customer might have gone for it. It’s a dilemma either way.
How the right technology makes it all fit into place
The only way out is to deliver on the promise every time, without fail. You can do it with the use of the right tech.
Since the last mile problem with multiple constraints, permutations, and real-time adjustments is too tough for a person to do daily, it can be put through an algorithm working on artificial intelligence and machine learning logic combined. This algorithm would suggest the perfect route, devoid of traffic to go along a delivery schedule which helps reach all destinations on-time. It would work on a continuously growing set of location data points that update live. All customer addresses would be verified in the system and the routes connecting them to the deliveries nearby would be made as short as possible. This would reduce overall turnaround time for the local distribution center, saving resource and time costs. The delivery schedule plan would give them ample idea about how to balance the incoming load and whether they need more vehicles to fulfill all deliveries.
Even along the different transportation legs, all moving elements are connected to a central monitoring system. Vehicle movement, in-transit product quality, driver behavior, package tracking from warehouse to distribution center – scanned at all entry-exit points. All this comes in the domain of what we have come to know as the Internet of Things. Through intricate and continuous connectivity, businesses can control all their movements from a single platform.
Such connected transportation, backed with instant notifications and alerts, gives a high degree of agility to the movement. Businesses can react to on-ground situations faster. Suppose, there is a vehicle breakdown, even before the driver calls up the manager, there would a repair or replacement vehicle on the way. It’s about covering all bases to ensure that there are no surprises when it comes to putting the desired product in the hands of the intended customer, on-time.
Technology is more acceptable than ever before. If all this seems futuristic, it’s not. It’s what’s happening in the world right now. To sustain in this environment businesses must accept that logistics, especially last mile optimization, is now a part of their value proposition to the end-customer.
Brand Content Manager
Faiz Shaikh heads brand content management in a globally leading cloud-based logistics optimization company, LogiNext. He has written multiple industry-renowned white papers covering tech-backed innovations in logistics and transportation. He continually writes deep insightful articles on the role of technology in improving last mile deliveries on multiple platforms.